Holding the Line
Bulls Out Over Their Skis in the Short Term
This was obviously a disappointing week for the bulls. We have yet to see the rollover in yields that we were anticipating in the near term, and as a result, crypto is starting to catch up with global equities.
We can see below that an apparently overzealous derivatives market exacerbated the lack of follow-through in the spot market. Below we map out bitcoin’s 3M basis and annualized perps funding rate.
Futures contracts were being priced at the highest level since April of last year, and perp funding rates were at their highest levels (in aggregate) since late 2021. As was required just a few weeks ago, it will likely require some of these unhealthy longs to be sidelined before we head higher.
Source: Fundstrat, Glassnode
Market Reprices Rates
As mentioned above, we have yet to see yields start to retreat. This was likely attributable to continued hawkish dialogue from Fed officials on the back of additional hot inflation data. This week, the inflationary data came in the personal consumption expenditure index, which increased 0.6% since last month, higher than analyst estimates.
Reports you may have missed
TURNING CAUTIOUSLY OPTIMISTIC There is a lot of pain in the ETHBTC chart. It peaked in December 2021 and, save for several brief rallies, has been on a downwards slope ever since. It peaked at just under 0.09 and currently trades around 0.038. Source: TradingView Fortunately, we have anchored most of our attention on BTC and SOL this cycle, as BTC has continued to lead the market in a generally...
BTC DECOUPLING FROM EQUITIES Over the past two weeks, BTC has begun to decouple from other risk assets. While the broader macro environment experienced choppy conditions from November 12th through yesterday, BTC has appeared indifferent to fluctuations in risk appetite, continuing its upward momentum and approaching the $100K milestone. A chart of BTC correlations highlights this decoupling, with sharp declines in its correlation to the QQQ, SPX, and IWM. The...
Market Lacks Convincing Signs of Market Froth, Major Demand Side Catalyst for CORE (Core Strategy Rebalance)
FROTH OR REPRICING? A heated debate is unfolding among crypto investors: have we just hit a local top, or will the breakout after eight months of consolidation continue higher through year-end? The crypto market has surged rapidly, as we anticipated, but the key question remains—can this rally sustain itself, or is it nearing exhaustion? Anecdotally, we are seeing renewed interest in crypto from casual observers. Friends and family are once...
TRUMP MAINTAINS A SLIGHT EDGE, BUT IT’S ESSENTIALLY A TOSSUP Well, it's here, folks – the moment that markets have been building up towards since January—the general election to decide the next President of the United States. As our clients know, we have been closely tracking polling and prediction market trends over the past several months, and these have served as a key input in our recommendations. Odds for both...
